Offshore Drillers Noble Corporation and Maersk Drilling to Merge

Offshore drilling contractors Noble Corporation (NYSE: NE) and Maersk Drilling have announced an agreement to combine the two companies, creating one of the leading offshore drilling companies.

The two companies will merge in a primarily all-stock transaction. The combined company will be named Noble Corporation, operating a modern fleet of 20 floaters and 19 jackup rigs.

Following the completion of the transaction, the Maersk Drilling (official name The Drilling Company of 1972 A/S (CSE: DRLCO)) shareholders and Noble shareholders will each own approximately 50% of the outstanding shares of the combined company. Its shares will be listed on the New York Stock Exchange and Nasdaq Copenhagen.

“Noble and Maersk Drilling share a very strong conviction about the compelling industrial logic for taking this step to create a differentiated offshore drilling company with the scale, capabilities, and resources to successfully serve a broad range of customers,” the company’s said in a press released announcing the merger. “The combined company will have a modern, high-end fleet of floaters and jackup rigs across benign and harsh environments able to meet the needs of customers in the most attractive oil and gas basins. This transaction will unite and leverage the strong capabilities of Noble and Maersk Drilling, which both have decades of experience, differentiated value propositions, and unwavering commitments to best-in-class safety and service quality.”

The combination is expected to generate estimated cost synergies of $125 million, which will be front-loaded with the full potential to be realized within two years after closing.

The merger agreement has been unanimously approved by the Boards of Directors of Noble and Maersk Drilling. The transaction is also supported by Noble’s top three shareholders, which collectively currently own approximately 53% of Noble shares, as well as APMH Invest A/S, which currently owns approximately 42% of the share capital and votes of Maersk Drilling. Certain foundations related to APMH Invest A/S, which currently own approximately 12% of the share capital and votes of Maersk Drilling, have also expressed their intention to support the transaction.

“This combination carries strong industry logic. With the combination we are creating a differentiated provider of offshore drilling services, which will be able to enhance the customer experience through increased scale, global reach, and industry-leading innovation,” said Maersk Drilling’s Chairperson of the Board of Directors, Claus V. Hemmingsen. “The combination will create value for all shareholders and will offer investors a unique opportunity to benefit from the market recovery, a robust financial position and strong free cash flow potential, all paving the way for the potential return of capital to shareholders.”

The combined company is expected to have a normalized free cash flow potential of up to $375 million starting in 2023. The combined balance sheet will have low net leverage and strong liquidity including a combined cash balance of approximately $900 million.

Noble’s Chairperson of the Board of Directors, Charles M. (Chuck) Sledge, said: “The combination of Noble and Maersk Drilling will create a leading offshore driller with global scale, a strong balance sheet and significant free cash flow generation potential. The transaction will be accretive to free cash flow per share, and I am confident that this combination will deliver meaningful value to all shareholders.”

Following closing of the transaction, Robert Eifler, Noble’s President and Chief Executive Officer, will become President and Chief Executive Officer of the new Noble Corporation and a member of the Board of Directors. Closing is expected in mid-2022.

“Both Noble and Maersk Drilling have many decades of history as leaders in the offshore drilling industry,” said Eifler. “I look forward to the future as these two great organizations come together to create a stronger combined company. Our shared passion for safety and operational performance will drive better service for our customers while delivering better potential returns to our investors.”

The new company will be headquartered in Houston, Texas, but will maintain a significant presence in Stavanger, Norway in order to retain proximity to customers and support operations in the Norwegian sector and the broader North Sea, while also ensuring continued access to talent.

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